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Why NRG Energy (NRG) Stock Is Up Today

NEW YORK (TheStreet) -- NRG Energy NRG was gaining 2.3% to $32.66 Friday after the energy provider announced a proposed offering of $1 billion of senior notes due 2024.

In a press release, NRG said it plans to use the new notes and cash on hand to repurchase the $298,548,000 in aggregate principal amount of its outstanding 8.5% notes due 2019, and $708,522,000 in aggregate principal amount of its outstanding 7.625% senior notes due 2019.

TheStreet Ratings team rates NRG ENERGY INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NRG ENERGY INC (NRG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 35.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Net operating cash flow has significantly increased by 391.20% to $447.00 million when compared to the same quarter last year. In addition, NRG ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -48.94%.

Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.

Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, NRG ENERGY INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 160.5% when compared to the same quarter one year ago, falling from $516.00 million to -$312.00 million.

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